Khater’s team on Wednesday published a fresh analysis of the housing supply shortfall. Over the past five decades, they showed, there has only been one year in which the supply of new housing was lower than in 2017. That was 1982, a year in which the Federal Reserve intentionally caused a recession to bring inflation to its knees. Throughout that year, the 30-year fixed-rate mortgage averaged 16.04 – and that was a sign of progress, because it had averaged 16.64% in 1981.

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The U.S. needs to be building about 370,000 more units per year than it currently is, the Freddie Mac team said. Put another way, they said, “we estimate that the U.S. economy is about 2.5 million housing units below what is needed to match long-term demand.”

That may be a tough order. Home builders face stiff headwinds, tight margins, and even a skittish customer base. “A troubling sign for 2019 is that the primary concern among prospective buyers is that prices may fall in 2019 which would reduce their equity if they purchase now,” said BTIG Research’s Carl Reichardt, Jr. in a recent client note. “Buyers are aware that builders are motivated sellers,” Reichardt said, yet it’s hard for builders to slash prices.

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